Maintaining Your Business is a new column from PTEN for tips on keeping your front office healthy, whether it be tax tips, retaining top techs, better upselling tips, marketing and more. PTEN is looking for more shop owners to share their stories of success and increased profitability with our readers. Send your submissions to the editor, Brendan Dooley, at email@example.com.
Fifteen years ago I was determined not to compromise my pricing structure for oil change services. I was confident that my customers knew the difference between my oil change service and the perceived low priced service at the quick lube. There was no compromising. After all, my oil change service at $45-$55 was far superior and my customers understood that. Right?
Well, as I stood steadfast, I saw my oil change services decline — along with other profitable services and repairs. How could the consumer see no difference in my oil change service and the quick lube? Was this a battle for the oil change business? The sad fact is we had already lost the battle. Right before our eyes the oil change service was reduced to a commodity used by the consumer to pass judgment on your business. If you were priced too high with an inconvenient drop-off service, you likely saw the customers chose to go elsewhere.
Many shops back then would not waver, and, for many shops, this ended up as financial suicide. Meanwhile, the quick lubes were up-selling all the “gravy” work to your customers; the fluid changes, air filters, wipers, tire rotations, belts and more. (Whatever you think of quick lube centers, the fact remains they have made a tremendous impact on our business and are a lucrative industry.)
Like many shops, we entered into a price war and lowered our price to a point that it didn’t make sense to do oil changes any more. It’s hard to win a price war. When you offer a low price you need to have sufficient daily oil change car counts and a system that allows you to create opportunity for up-sells. (We also considered giving up the oil change business to concentrate on more profitable jobs.)
So, are the oil changes very important to your business’ success? You bet they are! The oil change business is the foundation for all other maintenance services. You need the maintenance business for its high profit margins.
Working in pre-paid business
As I began to understand that competing on price alone was not the answer, I also began to realize I could use price as a weapon.
We created a plan to get back the oil change business. We needed customer data and a new oil change program. We made it mandatory for every car that came in to have three items noted on the work order: based on our history was the vehicle due for an oil change, who performed the last oil change service for the vehicle, and, if the last oil change was performed elsewhere, why.
This setup enabled us to inform a customer that the oil change was due, and find out why those customers going elsewhere for oil changes were doing so. We logged all the information on a spreadsheet and found that of cars going to quick lubes, most were due to price and convenience. (Many people said they didn’t know we did oil changes, while others said they didn’t want to drop off the car for an oil change.)
From this information, we created an “Oil Change Pre-Purchase Club” that included a four-pack oil change coupon book that the customer could pre-purchase at a reduced price ($10 off). We reduced the average oil change to $27.99, making the $17.99 reduced price very inviting. We tested this program around the Christmas holidays, and marketed with posters, flyers and in our newsletter. It was incredible. People who bought the coupons were coming back to buy more for family members. Word-of-mouth also brought in signups. After that positive test case, we launched the program again and it has been ongoing. (The program is designed for most cars. Exceptions are obvious: Mercedes-Benz, BMW, large pickups, etc.)
Back in the mid ’80s, cars started showing up at repair shops with engine systems that were computer controlled and the technician couldn’t even adjust an idle.
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